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The UK’s Loan Statistics – How many people seek a loan?

by Steve Lee / April 9th, 2018

Do you know how many people in the UK have taken out a loan this year? If you are interested in finding out who is borrowing money and all the latest loan statistics, read on. 

If you are looking to borrow money, sometimes it can feel like you are the only one who needs a cash injection, but you are not alone. There are thousands of people around the UK applying for loans, from guarantor loans to mortgages.

As reported in the press, the number of people looking to take out a loan is on the increases and year on year more people are seeking credit. Borrowing money and needing a loan no longer carries the stigma that it did many years ago.

And if you don’t believe us when we say how normal borrowing money is, we’ve got the loan statistics to prove it. We will show you statistics from 2017 for payday loans, student loans, car financing, guarantor loans and other types of loans. Your credit rating shouldn’t affect your access to lending products, which is why we’ve decided to show you statistics from loans where you will need to have a good credit record and loans for those with bad credit.

Our Loan Statistics

As we’ve already said, people are increasing taking out loans and there has been a year on year increase. We thought we’d explore the different demographics of loan borrowers, so that you can see who takes out payday loans, car finance, mortgages, student loans and guarantor loans. Well of course we’d be including Guarantor loans – we know a lot about those, being a specialist Guarantor Lender.

Let’s start with Payday Loans

Payday loans are unsecure loans. They are ideal for small amounts. Most payday loans are taken out for £100 to £1000. But beware, they are short term loans, that need to be paid back by the next payday as they have a very high interest rate, in comparison to other lending options. APRs can reach up to 1000%. That’s why you have to pay them off quickly – to keep in interest rate lower. If you miss a payment or end up having the loan for longer that you planned, the costs of the loan and the overall repayment, will very quickly rise.

Finder has some great loan statistics that we’ve decided to use in this blog. They found when they researched payday loans that the average loan size for applicants was around £260. Most people borrowed £100. And people quickly get into the habit of taking out more payday loans once they’ve paid back the first one. 3 in 4 payday loan customers took out more than one loan a year. The average number of loans for people who took out more than one loan was 6!

In terms of who is taking out these payday loans, the typical demographic was single, mostly employed or seeking work. They were aged between 25-30. Payday loan applicants were generally on lower incomes than the average UK worker, having a household income under £1,500. Payday loans were generally used for unforeseen expenses such as a funeral, broken car needed for work, faulty cooker or boiler in need of repair. The things that ideally there would be a savings pot for – but we know that this isn’t always an ideal world.

Our Statistics on Car Finance

You’ve no doubt read about car finance being on the rise and lots more lending options to finance cars, being made available to people. Taking out a loan to finance a car has become extremely common.Very few people can afford to buy cars outright these days, so the car finance market has woken up to this fact and is offering a more workable options – car financing.

Car finance can be done in a range of different ways. You can lease your car, or hire purchase, or personal contract purchase. Or you can apply for a personal loan to purchase a car.

The Guardian reported that between 2011-2016 there was over 100% increase in car financing, This rise is set to continue throughout 2018 and beyond. Over £30billion was borrowed through car financing in 2016 – 86% of which was through PCP (personal contract purchase). To put this into context, this amount has doubled since 2011 and it’s not simply because cars have got more expensive. Cars are essential to people’s lives, they ferry our kids to school, us to work and our parents to important hospital appointments. People need to buy cards without paying outright for one.

Car financing is now an essential part of the car buying marketplace. More and more people are turning to car financing as a lending option.

Now let’s talk about Student Loans

Well, gone are the days of full student grants. University is an expensive option these days. The course fees are extremely high, coupled with accommodation and basic living expenses. However, all is not lost, and University isn’t just for the wealthy. The Government will offer you a student loan, which helps cover your studying and maintenance costs. In fact, as reported by the Guardian, student lending is on the rise and has now doubled since 2012, to a total of over £100billion. These student loans have a low interest rate on repayment and repayment is only taken when you find a job and reach a certain income threshold.

To apply for a student loan you will have to meet a criteria. This includes things like age, nationality and previous higher education qualifications. Normally, the demographic of university student finance applicants are between the ages of 18-25, however, there are mature students who qualify for loans too.

So what about Mortgages?

If you want to buy a home, unless you’ve been lucky enough to inherit a large lump sum, you are most likely to need a mortgage. A mortgage is a type of loan that is exclusively used to buy a house or flat. Generally you will need to put down a deposit. The larger your deposit, the better rate and terms you will get, but most lender will need a minimum of 10% of the house price. With the average house price in the UK around £300,000, this means having a minimum deposit of £30,000.

Rates wise, mortgages are definitely at the lower end of the loans scale, because they are long term loans for large amounts. Rates are linked to the Bank of England Base Rate, which has been set at record low levels in recent years. Finder reports that mortgage rates at the end of February 2018 were approx. 2.63%.

Some say a house purchase is a great investment because houses generally rise over the long term (but not always and more importantly, not necessarily at the time you wish to sell). House prices rose in 2017 by approx. 4.5%.

Your credit score and credit history also comes into play when you are applying for a mortgage. Finder reports that there are  around 11.1 million mortgages in the UK,

So who is buying their first home and applying for a mortgage? Our research concludes that the average first time buyer in the UK is aged 30 and they have an annual income of around £40,000.

We’ve produced an infographic to summarise the loan statistics: 




Finally let’s talk about Guarantor Loans

As you probably already know, we are Guarantor Loans specialists, so we’ve been able to use our own data to demonstrates who applies for and takes out a guarantor loan. Of course, all the data is anonymised. We are pleased to report that Guarantor loans are on the rise. Currently over 150,000 people in the UK have taken out a guarantor loan.

The amount people are taking out when they apply for a Guarantor loan has also risen in recent years, with the average loan amount now standing at £4,894. Most people take out a guarantor loan for 36 months.

So who are the people taking out Guarantor Loans?

Most applicants are employed and either homeowners or living in rental properties. The average age of applicants is 36, but the oldest was 74 and the youngest 20. As long as both the applicant and the guarantor are between the ages of 18 and 78 at the start and the end of the loan term, they can apply for a Guarantor Loan. There is no geographical bias. Guarantor Loan customers tend to be based anywhere in the mainland UK.

What are people using a Guarantor loan for?

Common reasons for taking out a Guarantor loan include wedding loans, car finance, debt consolidation and home improvements.

Obviously, like any other form of loan, it’s worth shopping around before you apply for a Guarantor loan –  particularly if you have bad credit. Hopefully you will find us competitive and our excellent customer service rating on Feefo and numerous industry awards, prove that we value and look after our customers.

With a guarantor loan from TFS, you can borrow amounts from anywhere between £1,000 to £15,000, making them an ideal alternative to payday loans. It’s worth saying as well, that we are the only Guarantor Loans company in the UK, to currently offer guarantor loan amounts between £10,500 and £15,000, so we are an ideal option if you need a loan for £15,000 and you have a history of bad credit.

Guarantor Loans from TFS don’t have the same application criteria as traditional, single applicant loans. Effectively Guarantor loans are an old fashioned type of ‘trust-based’ loan. That’s why you need some to be your Guarantor when you apply. By having a Guarantor who has a good credit history and can afford to repay your loan if you cannot, you can access lending even with a poor credit history.

A guarantor loan is like any other type of unsecured loan, in that it can be used for any legal purpose. As we’ve already covered most of our customers us them as wedding loans, for car finance and as self-employed loans too (for business). Guarantor loans are usually leant over 1 to 5 years, at a representative APR of 39.9%.



And our final point: Debt has to be affordable

For all the loan options we have described above and in fact any other lending option, you have to be able to afford to pay it back. This means making every single repayment on time and in full. Taking out a loan you cannot afford to repay can cause you serious money problems. Payday loans are particularly concerning if you don’t pay them back when you are supposed to, because the high interest rates quickly build your balance to an uncontrollable amount. Whilst Student Loans offer undoubtably one of the lowest loan rates in the market, the clue’s in the name and you can only get one if you are a student and you meet the criteria. That said, if you are a student, they are well worth exploring, particularly because you only start to repay them when the Government has deemed it affordable to do so. They’re usually taken out of your wage and do not have to be paid manually. Car finance is becoming extremely common and there are lots of different lending options to fund your car purchase, so take the time to research them and find the best option for you. Mortgages, a bit like student loans, can only be funded under certain criteria – i.e. buying a property. Again the rates are currently favourable but it is extremely important with a mortgage that you view it as a long term commitment and you can afford to pay it back every month – especially if the rates rise. Your house could be repossessed if you fail to make mortgage repayments, so it’s important to stay on top of your outgoings. Finally, guarantor loans, are a great option for people with poor credit history or no credit history, who have struggled to get credit elsewhere. As with any loan it’s very important that when you apply for a Guarantor Loan, you can demonstrate that you can afford to pay the monthly repayments on time and in full each and every month.

TFS Loans are specialist Guarantor Loan lenders. A Guarantor Loan is a form of loan that requires someone to act as the Borrower’s Guarantor. We offer Guarantor Loans from £1,000 to £15,000, over 1 to 5 years.

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